Nearly 15 million Australians covered by private health insurance will see their premiums rise by more than 3 per cent in the biggest increase in five years.
The price rise comes as Treasurer Jim Chalmers warns of a possible economic downturn, and warning signs in the retail sector raise alarm in the government.
On Tuesday, the Albanese government approved an average industry health insurance premium increase of 3.03 percent, effective April 1.
The decision comes after several months of negotiations, which raised concerns in the industry that the decision would be delayed until after a by-election in the Victorian seat of Dunkley, which the Albanian government held despite voter discontent over the increasing cost of living.
Health insurers can increase premiums annually; However, the health minister must approve any increase.
On Tuesday, Anthony Albanese’s government approved an average increase in industry health insurance premiums of 3.03 percent, effective April 1.
Health Minister Mark Butler (pictured) said the annual increase in premiums exceeded the annual rate of wage growth and inflation, the benchmark for changes in social security payments.
In December, Health Minister Mark Butler blocked requests for increases of up to 6 per cent from the country’s 31 health insurers, forcing them to resubmit their proposals.
The insurers’ request was last blocked in 2019 by then Health Minister Greg Hunter, after which a 3.3 percent increase was eventually introduced.
Health insurance premiums have increased quite modestly in recent years: 2.9 percent in 2023 and 2.7 percent in both 2022 and 2021.
Overall insurance premiums have risen markedly in recent years, rising more than 17 percent in 2023, and have made a significant contribution to measuring consumer price growth.
The annual increase in premiums, Butler said, outpaced the annual rate of wage growth and inflation, the benchmark for changes in Social Security payments.
“I was not prepared to simply tick and change health insurers’ claims, as the opposition asked me to do,” Mr Butler said.
“I called on insurers to go back, sharpen their pencils and come up with a more reasonable offer for the 15 million Australians with private health insurance.”
This comes as the treasurer predicted a weak end to the year for the national economy, saying there were warning signs in the retail sector.
National growth figures for the December quarter are due to be published on Wednesday, with some predicting GDP will have retreated during the final three months of 2023.
Economists expect a subdued reading for the December quarter, especially after business inventories data from the Australian Bureau of Statistics on Monday fell more than expected.
Businesses were found to be depleting their inventories during the December quarter, recording a decline of 1.7 per cent, much softer than the flat result economists were predicting.
Jim Chalmers said quarterly results were expected to be weak in line with global trends.
“The December quarter was quite weak because people were depleting their inventories rather than producing or acquiring more stock, which is often a bit of a warning sign about economic conditions at the time,” he told ABC TV on Tuesday. .
“There are enough things to worry us about how the economy ends up in 2023.”
Health insurers can increase premiums annually; However, the health minister must approve any increase.
The price rise comes as Treasurer Jim Chalmers warns of a possible economic downturn, and warning signs in the retail sector raise alarm in the government.
However, there will be more economic indicators to feed Tuesday’s growth result, balance of payments and government statistics, which economists use to firm up their forecasts.
Despite the forecast for the quarter, Dr Chalmers said Australia was in a better position than similar economies, which had entered recession during the same period.
‘The December quarter in the Australian economy and indeed the global economy was quite weak. Remember, that was the quarter we saw Japan and the UK go into recession,” he stated.
“We had an interest rate increase right in the middle of that December quarter, we had those persistent cost of living pressures that people face in our communities and across our country.”
It comes as small business sales growth, as tracked by Xero through its accounting software registry, averaged 5.1 per cent annually during the December quarter, up from 6.8 per cent in the September quarter.
The weakness was most pronounced in interest rate-sensitive industries, such as retail trade (sales rose 1.2 percent annually) and agriculture (sales fell four percent annually).
Xero economist Louis Southall said multiple interest rate rises and high inflation were weighing on household budgets.
“And we can see a change in the December data, particularly in the retail sector,” he said.
The economist said conditions would likely remain challenging as interest rates remained high and inflation remained above the central bank’s target.